THE ROBBER BARONS OF THE 19TH CENTURY



Cornelius Vanderbuilt...

... an ill educated, ungrammatical, coarse, and ruthless, but clear-visioned man.

He started his millions in the steamboat industry. As a young boy he went to work for a small steamboat owner, Thomas Gibbons. After learning how to operate a steamboat, he designed one and persuaded Gibbons to build it. Vanderbuilt's slogans of low prices for superior rates attracted many customers. But an unknown to the passengers was that the food and drink on the boat was extravagantly overpriced.

Later Vanderbuilt saw that real money was in the railroad business. He established a shipping-land transit across Nicaragua, in response to the California gold rush. In 1873 he was the first to connect New York and Chicago by rail.

During all the money making, farmers were feeling the rear end of it all. Hit hard by the depression of the 1870s, they protested against "railroad bankruptcy". The government then stepped in and tried to control the railroad monopolies. By winning the Wabash case, it proclaimed that individual states had no power to regulate interstate commerce. Congress took it further by establishing the Interstate Commerce Act in 1887. It prohibited rebates and pools and required the railroads to publish their rates openly. It also forbade unfair discrimination against shippers and outlawed charging more for a short haul then a long one over the same line.



Andrew Carnegie...

... was known as the steel king. He was a gifted organizer and administrator. After achieving partnership in the "Pittsburgh millionaires", he further his wealth by devising the "vertical integration", which eliminated middleman fees. Carnegie integrated every phase of his steel-making operations; they were his miners at the Mesabi Range, they were his ships carrying the goods across the Great Lakes, his railroads that delivered to Pittsburgh, and his men who sold it; from mining to marketing, he was in charge of it all. Through this he could improve the efficiency by making supplies more reliable, control the quality of the product at all stages, and eliminating middleman fees and beat out his competitors who had to pay middleman fees. He could deign any price on his steel.

The government did not do much to stop Carnegie. But a hindrance in Carnegie's fortune building was the homestead strike. After Carnegie had bought the new steel industry, the people went on strike. Not wanting to deal with the strikers, he waited them out and hired scabs in the mean time.



J. Pierpont Morgan...

... a very wealthy man, was a banker's banker. He had devised a way of eliminating competition called "interlocking directories". During the depression of 1890s, many bleeding business men were driven into Morgan's wealthy arms. His prescribed remedy for them was to consolidate their rival enterprises and to ensure future harmony, he placed his own officers of his banking syndicate on their various boards of directors. By owning shares from eclectic companies, he increased his wealth. Later he bought out Carnegie and his steel company. The by adding other companies to join his empire, his wealth increased even more. He was also in control of six major railroad lines as well as the steel corporation.

Being of very wealthy descendants, he had plenty of gold in times when even the government was in need. He lent many businessmen money as well as the government, so the government, being in debt to Morgan, could do little to stop him. But then in 1933, the Banking Act was established. Although J.P. Morgan was out of the picture by then, this act effected his company by splitting the company in half. Some partners and workers left but the company still managed to keep intact and continued their success.



John D. Rockefeller...

... was an oil baron. He was the owner of the Standard Oil Company. His monopolizing strategy was the "horizontal integration", consolidating with competitors to monopolize a given market. To control bothersome rivals, he created the "trust", the Standard Oil Trust. A board of trustees was set up and the company's properties were placed in its hands. Then every week each stockholder received their share of the profits. This allowed the Standard Oil to function as a monopoly since the board of Trustees ran all the component companies. Through the "trust?s crushing power and vast income, it proceeded to acquire almost all of the world's oil refining capacity.

On March 21, 1892, the "trust" was dissolved. Each